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Will China Merrily Row Its Boat on Myanmar’s Stream? – Prospects of Restarting Myitsone Dam Project

C3S Paper No. 0050/2016

This is the second and the final part of this article. The first part was published in Myanmar Business Today’s last week’s edition (Vol. 4, Issue 13).

Which way will the tide turn?

Suu Kyi is responding in a two-pronged manner to China’s overtures. On one hand she strongly objected to the Myitsone project, saying that it poses serious environmental risks, made worse by nearby fault lines that “raise the spectre of horrendous devastation” in the event of an earthquake. On the other hand she is hinting that another China-backed project, the copper mine at Monywa, should continue despite legitimate concerns. She reiterates this belief, by stating it is necessary in order to encourage foreign investment and maintain a positive relationship with China, apart from maintaining Myanmar’s international standing.

In addition, a few ethnic minority lawmaker delegates from Myanmar visited China ahead of the 2015 elections. This must have been in lieu of the ethnic groups desiring development in their provinces back home via China’s assistance. However it is ironic that China on one hand sets up economic projects that increase unequal distribution of wealth, which in turn fuel conflict, and on the other hand Beijing declares that peace in Myanmar is essential for China’s economic ambitions.

Myanmar is an essential part of China’s Maritime Silk Route and One Belt One Road projects. Therefore, China will engage in optimum diplomatic capacity to try and revive the suspended Myitsone project. Aung San Suu Kyi will face a dilemma: respond positively to Myanmar’s biggest trade and investment partner, or bow to the wishes of her people. If she takes China’s side, there will be a significant backlash against her government. She is likely to reject China’s request. But she may compensate for it by asking China to invest in other projects.

For instance, Myanmar has granted a Chinese company CITIC Group Corporation two contracts for projects in Kyaukphyu Special Economic Zone in December 2015. These involve developing a deep sea port apart from an industrial area. Significantly, Kyaukphyu lies on the coast of Rakhine state, which borders the Bay of Bengal. It is not apparent whether the Rakhine National Party’s China visits in 2014 and 2015 have an important role in influencing Myanmar’s decision. Another project that could be up for discussion is a planned $20-billion railway linking Kyaukphyu in Rakhine state with Kunming in China, which was reportedly dropped in July 2014 due to public opposition in Myanmar. The railway would have been strategically located alongside the oil and gas pipelines connecting China and Myanmar.

There are visible concerns among the locals on the transparency of the Kyaukphyu port project, such as regarding displacement. India too will be apprehensive that China’s port development activities are increasing in the Indian Ocean region. However Delhi has listed its own bilateral engagement with Myanmar as a priority.

However a middle path is possible. The Myitsone project can be restarted but with certain conditions. It must be ensured that the dam is made earthquake resistant, equitable distribution of power and profits occurs and adequate compensation is given for displacement of villagers.

Waves from Napyitaw to Delhi

Delhi supports Myanmar’s democratic transition. For instance, it is not pressurising the Myanmar government after the latter scrapped two hydroelectric projects that were being planned with India’s assistance at Tamanthi and Shwezaye on the Chindwin River in Myanmar. The issue of resettlement of the locals triggered the Myanmar government’s decision, which India fully respects.

It is interesting to observe another contrast to China, that of the India-Myanmar Kaladan Multimodal Project not getting suspended or cancelled, even though there is a hint of rumblings of opposition from environmentalists in Myanmar. This aspect shows that India may have more political clout in Myanmar than commonly perceived. India must capitalize on this goodwill perceived by Myanmar.

India can engage diplomatically with Myanmar to ensure that the Chinese Kyaukphyu port project does not affect its own strategic interests in future. India too can bid for similar projects in Myanmar to enable higher economic engagement.

Nevertheless India must remember that equitable development must be the cornerstone of its economic projects in Myanmar. Aung Sang Suu Kyi sees political opportunity in India’s economic forays into Myanmar. She also realises that India’s experience of running a successful democracy amid development of multi-ethnic citizens is a model for Myanmar’s future. According to her, “I would like India to focus attention on strengthening local government. We are a union made up of many ethnic nationalities, and I would like would-be investors to focus on how to bring us closer together as a union.” This is a profound call to India, to wake up and recognise the political prospect available via economic strategy. Delhi is already venturing down this path, as seen by its aid given to a few impoverished Myanmar provinces.

China too may grant soft loans and aid to Myanmar, instead of continuing to pressurize the country on the Myitsone project. Perhaps a welcome strategy would be for both India and China to cooperate in ventures that will consolidate equitable development of Myanmar’s citizens. Competition will only increase mistrust. The Irrawaddy is an ideal spot to start such cooperative initiatives. Instead of harmful dam projects, both countries can focus on capitalizing on the fertile Irrawaddy delta, improving agricultural economies and thereby harvesting rich dividends for all parties involved.

(Asma Masood is a Research Officer with the Chennai Centre for China Studies, India. She can be reached at Twitter: @asmamasood11. Views and opinions expressed in this article are the author’s own and don’t necessarily reflect Myanmar Business Today’s opinion.)

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